Hospitals are being asked to identify green spaces and unused land that could be sold off as space for housing developments.

The Department of Health believes that nearly 10 per cent of hospital land is "under used" – the equivalent of 276 football pitches. They want it to be re-allocated to build affordable housing, with the money reinvested in the NHS to benefit patients.

Critics fear that much of the land earmarked for development is green space – used by patients and relatives – and say that selling off surplus land now could make it harder for hospitals to redevelop in the future. But Simon Burns, a Health minister, said selling off the land could raise up to £2.5bn over the next five years – the equivalent of pay for 50,000 nurses.

"If we want to modernise the NHS and make it more efficient, then we need to be proactive and identify land that is no longer used or needed," he said. "Any money raised from surplus land will be used to benefit patients. We are increasing investment in the NHS by £12.5bn, but faced with an ageing population and rising costs of treatments, the NHS needs to be smarter with its resources."

The NHS has been told it needs to save £20bn over the next four years to meet the financial targets set by ministers in the Comprehensive Spending Review.